The charges against Rick – a lower-level employee, accused of inflating loan recipients’ incomes to make the mortgages more appealing to those who would buy them from Pierce Commercial Bank – appear to flow from an extensive investigation into practices at the bank prior to its collapse in 2010.

Pierce Commercial Bank -- which had loaned a significant amount of money to those involved in a “straw buyer” mortgage scheme perpetrated by Bellevue businessman Mark Ashmore – closed its home loan business and came under increased scrutiny from state and federal regulators because of the badly damaged loan portfolio. State regulators closed the bank Nov. 5.

"Like many institutions, Pierce Commercial Bank has experienced large losses associated with construction and land development loans," Brad Williamson, Banks Division director for the Department of Financial Institutions, said at the time. "Unfortunately, the bank also suffered from poor mortgage lending practices that further impacted the bank's earnings and capital."

In charging documents filed Friday, federal prosecutors contended Rick and others inflated loan applicants’ incomes and hid their debts in order to extend loans to them. Rick, prosecutors claim, also provided the bank with falsified copies of cashiers’ checks meant to show that the would-be borrowers had paid their debts.

Similar charges were filed July 13 against two other Pierce Commercial Bank loan processors, Katherine Friske, 53, and Jill Reding, 46. Both have since pleaded guilty to bank fraud charges through sealed plea agreements.

The charges against all three follow on a series of federal prosecutions against the bank’s employees and customers, including Ashmore. Ashmore, 42, was convicted last year of running a mortgage fraud scheme with the help of loan officers and processors at the bank.

The IRS criminal investigations division also seized a garbage bag containing $102,000 in cash from the Puyallup home of former Pierce Commercial Bank executive Shawn Portmann who, as a loan officer, originated nearly $1 billion in mortgage loans in less than three years.

No charges have been filed publically against Portmann or two other Pierce Commercial Bank executives implicated by other defendants targeted by federal prosecutors. Those submissions to the court in related cases suggest the investigation into Pierce Commercial Bank’s activities remain ongoing.

Writing the court, prosecutors contended that Rick, like Reding and Friske, was among a group of Pierce Commercial Bank Home Loans employees falsifying home loan applications between July 2004 and July 2008.

Along with others at the bank, they falsified employment information for unemployed borrowers, inflated borrowers’ incomes and faked rental histories, prosecutors claimed.

The loan processors’ statements prompted the bank to extend loans to unqualified borrowers, according to the charging documents.

The falsified claims, in essence, prompted the federal government to insure loans to applicants who weren’t qualified to receive an FHA-backed loan, Assistant U.S. Attorney Robert Westinghouse told the court.

Many of the loans were then resold to other lenders, including Countrywide, Wells Fargo and JP Morgan Chase, with Pierce Commercial Bank receiving a fee from the secondary lender. Mortgage recipients also paid a fee to Pierce Commercial Bank.

Like Friske and Reding, Rick has been charged by information, a move that usually means a plea agreement has been reached between prosecutors and the defense. He is scheduled to make an initial appearance on Tuesday at U.S. District Court in Tacoma.

Friske is scheduled to be sentenced Oct. 3. Reding’s sentencing is set for Oct. 24.